Affordable Care Act: Understanding the basics

Published: Sunday, September 29, 2013 at 05:07 PM.

High deductible health plan — This benefit is normally used in conjunction with the catastrophic coverage. The deductible refers to the amount of money you must pay before benefits begin.

Copay — The amount of money you are responsible for paying at a doctor’s office visit, when filling prescriptions, visiting the emergency room, etc.

AEP — Annual enrollment period. This is the window of time you have to apply for insurance and make changes in your plan.

Navigators — People who are not licensed insurance agents who volunteer their time to assist the public with the requirements. They take a class to help people with the enrollment process. They cannot be paid by insurance agencies.

Co-insurance — Refers to the percentage of the bill you share with the insurance company. For example, co-insurance for most plans requires you to pay 20 percent and the insurance company to cover 80 percent.

Deductible — This is the out-of-pocket expense an insured person is responsible for, before the insurance benefits begin.

Premium tax credits — Help to afford health coverage purchased through the exchange. Advance payments of the tax credit can be used right away to lower your monthly premium costs. If you qualify, you may choose how much advance credit payments to apply to your premiums each month, up to a maximum amount.

Whatever you want to call the nation’s sweeping changes in health insurance requirements, you’re about to see the biggest piece of the plan go into action.Starting Tuesday, Americans will get their first look at the system that allows most everyone across the country to start buying coverage.

Keith Mills of Mills Insurance Agency offers this help for understanding the basics of the Affordable Care Act.

Q: Does everyone have to buy insurance?

A: The Patient Protection and Affordable Care Act requires almost all Americans to buy a health insurance plan, either individually or through an employer sponsored program.

There are limited exceptions. People who don’t make enough to file taxes are exempt. So are inmates, American Indian tribal members and people with religious objections.

Q: When do you have to have insurance?

A: Everyone (or almost everyone) will be required to have coverage on Jan. 1.

You’ll pay a penalty if you’re not covered by a health insurance plan by March.

Q: Why must people have insurance? Can you explain the new requirement?

A: The Affordable Care Act works through a shared responsibility.

The law no longer allows insurance companies to deny coverage because you have a pre-existing condition. It also puts lower caps on out-of-pocket costs and requires all plans to offer certain kinds of coverage.

In order for that system to pay for itself, all Americans must be part of the system and must have health insurance.

Without some type of mandatory individual coverage requirement, the plan would fail.

Q: What if someone doesn’t get insurance? What is the penalty and how is it paid? Is it through a tax penalty?

A: The penalty (or tax) for an individual who doesn’t have insurance:

2014:

$95 per adult, or 1 percent of your household income (whichever is greater)

$47.50 per child

Maximum family penalty: $285

2015

$ 325 per adult, or 2 percent of your household income (whichever is greater)

$162.50 per child

Maximum family penalty: $975

2016

$695 per adult, or 2.5 percent of your household income (whichever is greater)

$347.50 per child

Maximum family penalty: $2,085

The penalty will be imposed when the person uninsured files their 2014 tax return.

Q: When do the health exchanges begin? Can you explain what that is and what it involves?

A: The health exchange, or marketplace, begins operating for the public Oct 1.

It’s a tool you use to compare and buy health plans available in your area.

Plans and prices are based on the county where you live.

You can buy coverage from a different company, but doing that means you won’t qualify for income-based help paying your monthly premium.

Q: What if someone already has insurance through an employer? How will this affect them?

A: Individuals covered under employer-sponsored group insurance plans that meet the minimum coverage requirements won’t be subject to any penalty.

Q: What if you already have insurance you pay for on your own?

A: Many major medical plans for individuals will be discontinued at their renewal in 2014, if not before. Insurance companies are modifying their policies to comply with the new requirements under the Affordable Care Act.

Remember, in order to qualify for help paying your required insurance premium, you have to buy that insurance on the health care exchange or marketplace.

Health insurance glossary

HMO — Health maintenance organizations

EPO — Exclusive provider organizations

PPO — Preferred provider organizations

POS — Point of service

*HMO, PPO, EPO, POS refer to managed care, which is any system that puts certain limits on the doctors the plan pays in order to control costs. Insurance companies negotiate discounts with certain providers. In return, the person insured is required to use those providers for health care.

Catastrophic coverage — Coverage designed to protect you from financial disaster in case of serious medical emergency. This type of coverage requires you to meet a high deductible — or pay a lot out of pocket — before the insurance company’s payments kick in. In return, the premium is normally lower.

High deductible health plan — This benefit is normally used in conjunction with the catastrophic coverage. The deductible refers to the amount of money you must pay before benefits begin.

Copay — The amount of money you are responsible for paying at a doctor’s office visit, when filling prescriptions, visiting the emergency room, etc.

AEP — Annual enrollment period. This is the window of time you have to apply for insurance and make changes in your plan.

Navigators — People who are not licensed insurance agents who volunteer their time to assist the public with the requirements. They take a class to help people with the enrollment process. They cannot be paid by insurance agencies.

Co-insurance — Refers to the percentage of the bill you share with the insurance company. For example, co-insurance for most plans requires you to pay 20 percent and the insurance company to cover 80 percent.

Deductible — This is the out-of-pocket expense an insured person is responsible for, before the insurance benefits begin.

Premium tax credits — Help to afford health coverage purchased through the exchange. Advance payments of the tax credit can be used right away to lower your monthly premium costs. If you qualify, you may choose how much advance credit payments to apply to your premiums each month, up to a maximum amount.